Carnival vs Royal Caribbean: Which Cruise Line Stock is the Better Investment?

Carnival Corp. and Royal Caribbean are both recovering from the pandemic, with Carnival doubling and Royal Caribbean shooting 127% higher in the past year. Both companies have exceeded profit targets and raised full-year guidance. Royal Caribbean is trading at 20 times this year's net income guidance, while Carnival is trading at 15 times. Royal Caribbean is considered the better investment due to its higher valuation and consistent earnings beats.

Carnival Corp. and Royal Caribbean are both experiencing robust recovery post-pandemic, with significant gains in stock prices and earnings. Carnival's stock has doubled in the past year, while Royal Caribbean has surged by 127%. Both companies have exceeded profit targets and raised full-year guidance, indicating strong demand and operational efficiency.

Carnival Corp.

Carnival Corp. reported smooth sailing in the second quarter, with revenue growing by 9.5% and earnings per share increasing by 218% [1]. The company ended the quarter with $8.5 billion in customer deposits for future cruises, up 26% from the previous year. CEO Josh Weinstein attributed the strong results to the company's ongoing strategy to deliver high-margin revenue growth [1]. Carnival has also made progress in improving its balance sheet, reducing net debt to 3.7 times earnings before interest, taxes, depreciation, and amortization (EBITDA) [1].

Royal Caribbean

Royal Caribbean also delivered back-to-back "beat and raise" quarterly performances this year. The company reported adjusted earnings per share of $4.38 for the second quarter, which was 36% higher than the previous year and exceeded guidance by $0.33 [3]. CEO Jason Liberty attributed the outperformance to better revenue, a shift in the timing of some expenses, and better below-the-line performance [3]. Royal Caribbean's net yield grew 5.2% in constant currency, with capacity increasing by 6% and guest volume rising by 10% year over year [3].

Valuation and Earnings Growth

Royal Caribbean is trading at 20 times this year's net income guidance, while Carnival is trading at 15 times. Despite the higher valuation, Royal Caribbean is considered the better investment due to its consistent earnings beats and higher revenue growth [2]. Royal Caribbean has historically grown revenue faster than Carnival and has consistently cranked out best-in-class margins, explaining its larger market cap [2].

Conclusion

Both Carnival Corp. and Royal Caribbean are strong performers in the post-pandemic recovery, with significant gains in stock prices and earnings. While Carnival has made progress in improving its balance sheet, Royal Caribbean's higher valuation and consistent earnings beats make it the preferred investment. Investors should monitor the companies' performance and the broader economic environment, but the current trends suggest a promising outlook for both cruise line operators.

References

[1] https://www.aol.com/why-carnival-stock-cruised-forward-114100598.html
[2] https://www.aol.com/best-stock-buy-now-carnival-101500032.html
[3] https://www.fool.com/earnings/call-transcripts/2025/08/05/royal-caribbean-rcl-q2-2025-earnings-transcript/